USD/JPY illustrates the limits of seasonals. Like any technical indicator, it’s only useful until something dramatic changes in the fundamental picture. The worst seasonal period of the year in USD/JPY is July-Oct but the pair has risen 8% since July 1. The US is leading the world in growth and the Fed is shifting to a hawkish stance and that’s what matters.

There’s always a chance for USD/JPY to fall on a rout in risk assets but there have been a few speedbumps in the past two weeks yet USD/JPY has hardly noticed. October is the worst month on the calendar for USD/JPY over the past 30 years but I don’t see any case for selling the pair.

Oct USDJPY seasonals

Oct USDJPY seasonals

Verdict: Forget October. Look to buy any dip in anticipation of the Nov-March seasonal strength.